Basically there are two ways for an application to detect the URL to the WPAD server:
Although WPAD has not become an internet standard yet, both Internet Explorer and Firefox try to acquire the WPAD script if you configure automatic proxy configuration, but in a slightly different way. Internet Explorer prefers DHCP information over DNS whereas Firefox only uses DNS.
Also, Window's built-in WinHTTP Web Proxy Auto-Discovery Service uses either DHCP or DNS to obtain WPAD information.
Typically, the wpad.dat script is generated and served served by firewalls and proxy servers like Microsoft ISA Server based on the network configuration (you could also write your own custom WPAD script). The WPAD HTTP server, like any other HTTP server, listens on port 80 for incoming requests. Because this would lead to conflicting ports if you're running another ("workhorse") HTTP server on port 80 of the firewall/proxy, WPAD-enabled firewalls and proxies typically let you choose an alternative port to listen for WPAD requests. All you need to do is to change the DHCP URL accordingly.
But what about the DNS case? As stated above, DNS does not carry port information. A successful DNS lookup for the WPAD host is all to justify a subsequent HTTP request to the server on port 80. But there's not the WPAD server answering, it's the workhorse HTTP server not knowing about a file called wpad.dat: HTTP/404. Bummer.
Of course, you could copy wpad.dat to your "real" workhorse web server. But if the firewall/proxy configuration changes, you would need to copy the file over and over again. Certainly nothing a good network administrator strives for.
Wanting a free solution, I a proxy web site on the workhorse IIS with an ASP.NET IHttpHandler.
rem Test the real WPAD server, this is what the proxy web site uses.
wget http://wpad:<alternative port>/wpad.dat
rem Test the proxy WPAD server, this is what clients use.
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